Baku: Oil and Identity

[Rachel Hicks]

Baku has many narratives and legacies: a historic city with a world heritage site, ethnic conflict, cosmopolitan identity, extreme economic disparity, and oil. Oil has defined Baku for the West, including Russia, since the nineteenth century. The modern narrative of Baku’s oil has roots in ancient history. The legend of the ‘eternal flame’ inspired fire worshipers to build temples near the flames that were produced by crude oil’s interaction with the atmosphere (Johnson, 434). These temples were probably using natural gas and were mostly destroyed when Byzantine emperor Heraklius invaded (Gökay, 3). Little is known about the early exploration for oil, but the first recorded export of oil was in the tenth century (Gökay, 3). Marco Polo, while traveling the Silk Road in the 1270s, remarked that the area had a liquid “good to burn and to anoint camels with, against mange and dandruff” (Gökay, 3). There is also evidence that oil was used to remove stains from fabrics (Gökay, 3). The period leading up to Russian occupation has little documentation of oil commerce, but clearly it was occurring. In 1734 there were fifty-two hand-dug wells active on the current Balakhany field (Gökay, 17).

After the Mongol conquest, the Baku khanate formed but was annexed by Russia by treaty in 1813 (Johnson, 434). Previously home to the Shirvanshahs, a dynasty in the Middle Ages, the Persian city was russified almost overnight by the Russians’ discovery of oil:  “Old houses were being pulled down while the ‘wretched booths of the Persians were being replaced by spacious Russian shops’” (De Waal, 49). The city became the world’s foremost oil city. Oil was clearly already a part of Baku before the Russians acquired the city, but the industrial revolution gave oil a new status in the world market. Thus, Russia actively developed the oil industry of Baku for the next two centuries. The oil industry was therefore distinctly foreign, and since the fall of Communism Azerbaijan has tried to gain control of the oil industry.

There were 82 oil wells operating at the start of Russian occupation (Gökay, 4). The first viceroy to the Caucasus in 1847 authorized oil exploration by means of drilling, and the first well was in the Bibi Eibat field in 1848 (Gökay,4). Oil production increased from the region during the nineteenth century, but mechanical drilling was not introduced there  until 1871. Russia’s annual production of oil increased from 41,000 barrels in 1863 to 204,000 barrels in 1870, all of which was due to Baku (Gökay, 4). The individuals profiting from the oil industry were a diverse group. The tsarist government owned most of the land containing the oil, but operated on a lease system from 1813 to 1825 providing licenses to entrepreneurs (Gokay, 5). However, from 1825 to 1849 the government rescinded the contract system and profited alone from the oil. The contractor system was reintroduced in 1849, and by 1872 the Russian government had abandoned the sole contractor system and began auctioning leases (Gökay, 5).

Foreign participation in the economics of Baku derived most obviously from the Nobel brothers’ involvement in the industry which led to the first pipeline. With the tsarist monopoly abolished, Robert and Ludwig Nobel arrived in Baku in the 1870s and bought an oil refinery (Johnson, 436). They soon

secured oil plots, improved the technology of rigs, pioneered deep drilling, constructed iron reservoirs for the storage of oil and pipelines and railroads and bulk tankers to transport it, and set up a network for the retail distribution of it. In ten years they built—thanks greatly to the polymathic genius of Ludwig, who became known as “the Oil King of Baku”—what Yergin describes as a “highly integrated oil combine” that in short order “dominated the Russian oil trade.” That trade assumed international proportions in the years after the Transcaucasian railroad between Baku and the port of Batumi on the Black Sea was completed in 1883, thanks greatly to a loan from the Rothschilds of Paris, who were by 1886 the Nobels’ strongest competitor among all the companies exploiting Baku. (Johnson, 436).

As a result of their success more infrastructure was built, including the Baku to Batumi pipeline which was completed in 1905 and ran parallel to the railroad line which they also built from Baku to Batumi (Gökay, 7). The majority of the wells were in land owned by foreigners: European, Russian, or Armenian (De Waals, 169). The economics of the region combined with ethnic tension has led the area to be called “Bosnia with oil” (Johnson, 441). The pipeline was initially guarded from the Tatars, who received none of the profits from the economic growth (Johnson, 440). Eventually the tensions between the Armenian bourgeoisie and the Azeri workers contributed to the  Tatar-Armenian war of 1905 (De Waals, 169). The increase of foreign interest resulted in further changes in Baku culture: “Baku proper was adorned with beautiful hotels and casinos, parks and gardens, and the palatial homes of oil barons not just from Sweden and France but also from Britain, Switzerland, Belgium, Germany, and the United States. Surrounded by forests of derricks, it was ‘the Black-Gold Capital’ of the world” (Johnson, 436-437). Baku was no longer just undergoing Russification, it was experiencing globalization. Essad Bey, the son of a German oil field owner and a Bolshevik woman, wrote a memoir detailing his experience growing up in Baku. The culture he describes is of intense racial divides, extreme corruption, and a multiethnic population of the very rich and the poor. At one point he was kidnapped by Armenian radicals; his ransom money was to help fund their political party. Baku was a diverse city, Bey spoke Russian, Azeri, and German, but the ethnic lines that divided the rich from the poor created a hostile environment.

The divided society created by the oil practices of the tsarist regime was completely transformed by the First World War and the Revolution of 1917. World War One showed that the region was a valuable commodity, as various nations attempted to conquer the region for the oil, but the aftermath of the revolution of 1917 redistributed the oil wealth among the inhabitants of Baku. Occupied by the Ottomans and then the British, Baku eventually was under the independent Azeri government until it fell to the Bolsheviks in 1920 (Goaky, 8). Essad recounts the horror of many oil field owners who lost millions when the government collectivized the industry. Many were then purged. After the war, Baku and her oil were instrumental in Russia’s economy. Production continued to increase and industry was moved closer to the oil fields. The cultural change that Baku experienced was akin to the rest of the region: a Sovietization that according to Essad meant “the old East is dead” (Essad, 315).

Despite the demise of Baku’s reputation as a wild frontier, and despite the bloody end of the oil magnets who used to run the city, Baku still had economic value for the West. During WWII, Hitler deemed Baku to be an urgent target of conquest.  His staff even made him a Caspian Sea birthday cake and he took the slice with Baku written on it decorated with chocolate to look like oil (De Waals, 170). Hitler never reached Baku. Production continued to increase after WWII and the USSR was able to maintain her position as the world’s largest producer of energy because of Baku (Gökay, 11). Although the industry and technology of Baku lagged behind Western standards, Baku was still successful and her legacy of globalization continued on a much more limited scale. Baku was able to embrace American jazz and became known as the Soviet Union’s most cosmopolitan city. American jazz had staying power in Baku culture from the 1930s through the Soviet period to even now; the Baku Jazz Festival is held annually (De Waals, 90-91).

However “open” the culture of Baku, the ethnic divisions remained and erupted post-1989. Spurred by the economic divide created by oil money, the ethnic tensions echoed the legacy of Baku in the nineteenth century. The Soviet Union also left the industry of Baku largely underdeveloped and her true oil potential was a mystery to the West. The region had a ‘black gold rush’ both in the 1800s and again after the fall of the Soviet Union as the Western world scrambled for oil in the Caucasus.  Dealing with independent republics with constant changes and corruption eventually led to Western companies and governments banding together for the contract of the century: the Baku-Tbilisi-Ceyhan (BTC) pipeline.  The BTC pipeline completed the linkage of the Caspian Sea to the Black Sea and the Mediterranean Sea; it was considered “the first great engineering project of the 21st century” (De Waals, 170). The negotiations to create the pipeline presented international dilemmas to newly independent Azerbaijan. Navigating the areas where the pipeline should run was difficult and currently the pipeline runs through multiple areas of ethnic conflict and tension. The presence of American money required Iran to be excluded from all aspects of the pipeline. These hurdles were overcome and again Western influences filled the city. Since the success of the BTC pipeline, other pipelines have been proposed and built linking the oil of Baku to the world.

Effectively the oil industry has overlaid an international culture on an ethnically divided region. Baku is one of the few places where Armenians resided in Azerbaijan despite the Azeri-Armenian conflicts. This cosmopolitan heritage is well founded, but whether Baku will continue to embrace it is unclear. Oil has staying power and has clearly again elevated the city, but the cosmopolitan nature of the city is still in the process of being defined. Some cry foul as the historic city is physically modernized, but festivals are held to celebrate the historic Maiden tower. The majority of people in Baku do not have the benefits of the money to spend to enjoy the Western culture brought by the investors. Globalization in a region so ignored has given Baku a distinct sense of identity, some even say ethnicity, but the history of oil truly has polluted the waters of Baku, providing many options in her identity.


Works Cited:

  • Daniel McLaughlin, “Prized by Hitler, Azerbaijan is back in oil and gas boom” Irish Times April 18, 2012 <>.
  • Ulviyya Asadzade, Khadija Ismayilova, and Amanda Rivkin “Azerbaijan: Baku is Bulldozing its Past” April 27, 2012
  • Baku to host traditional Maiden Tower FestivalWed 25 April 2012
  • Thomas De Waal, The Caucasus: An Introduction (Oxford: Oxford University Press, 2010).
  • Essad Bey, Blood and Oil in the Orient (New York: Simon and Schuster, 1932).
  • Bülent Gökay “The background: History and Political change” in The politics of Caspian oil ed. Bülent Gökay (New York: Palgrave, 2001).
  • Johnson, Michael L. “From the Big Bang to Baku: A Primer on the Beginnings of the Petroleum End Times.” Southwest Review 95, no. 3 (March 2010): 426-443. Academic Search Complete, EBSCOhost (accessed May 2, 2012).